Revealing The ESG Paradox in 5-ASEAN Countries: Intellectual Capital Efficiency under Earnings Persistence and Sustainability Pressure
DOI:
https://doi.org/10.24843/MATRIK:JMBK.2026.v20.i02.p06Keywords:
ESG; intellectual capital; earnings persistence; sustainable development score.Abstract
This study is motivated by inconsistent findings about ESG implementation on Intellectual Capital (IC) in developing countries. Several studies show the benefits of ESG on increasing intangible asset value, but other studies reveal that ESG creates costs without increasing internal efficiency. This study aims to examine the effect of ESG on IC-efficiency by considering two moderating variables: Earnings Persistence (EP) proxing an earnings predictability of companies’ financial reporting, and Sustainable Development Score (SDS) as an external pressure of sustainable implementation within the countries. This study using secondary panel data in ASEAN5 countries on non-financial companies from 2015 to 2023. The results show that ESG has a negative impact on two dimensions of IC, namely Structural Capital Efficiency (SCE) and Cost of good sold-based Relational Capital Efficiency (RCECOGS), but not significant on Human Capital Efficiency (HCE). The EP and SDS as moderating variables show significant negative effects, indicating that companies with high earnings predictability and high sustainability pressures countries tend to experience the negative impacts of ESG on ICefficiency. These findings have important implications for corporate managers and policymakers in designing adaptive ESG strategies and policies in developing countries.
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